AI is driving "quiet quitting" by eroding entry-level skill development, profoundly impacting Gen-Z. Declining employee engagement, globally and in India, is evident as junior staff gain minimal lasting expertise from AI tools. This disengagement, alongside changing job content and managerial disillusionment, presents significant economic and societal risks for India. The author warns that unchecked AI-driven skill hollowing will cause severe productivity losses, demanding urgent attention for national prosperity.